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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: bruwin who wrote (63144)	1/11/2020 2:38:25 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78751

are CVS the important fact is that CVS shows organic growth after their Aetna purchase including their retail, while WBA shows shrinkage. due to the Aetna acquisition, they added quite a bit of debt (I think it was roughly $50B), and they are now deleveraging. There are two ways to delever er, a hard way via paying back debt and the easy way via growing the business and the FCF, which even if no debt is payed back improves the credit metrics (EBIT or EBITDA/ EV) and of course combinations there off. CVS earnings are roughly $5B in GAAP, but including the non cash amortization expense (from acquired intangibles) the cash earnings are ~$7/ share which means that the PE is a bit higher than 10. It would argue thats it’s actually a better bargain than WBA at this point, as long as current trends stay in place. CVS simply is executing better with their integrated insurance, Pharma benefit and retail/pharmacy concept and they have mini clinics in some of the pharmacies in my neighborhood and it seems to be working. I have just a few shares (cost basis $53) that I swapped to harvest tax losses in WBA a while ago and will be keeping them as long as they execute.